Art Resale Royalty Options

68 Pages Posted: 18 Oct 2015 Last revised: 5 Oct 2016

See all articles by Herbert I. Lazerow

Herbert I. Lazerow

University of San Diego School of Law

Date Written: October 16, 2015

Abstract

Proposed federal law requires payments from the reseller of art to an artist when her work is resold. They can be conceptualized as a substitute for copyright royalties or for the profits of a joint venture between the artist and the collector. Application is analyzed by art type, especially multiples, place of sale, and nationality or residence of the seller, buyer, intermediary or artist, and by what constitutes a sale in a world of leases, exchanges, gifts, bequests, charitable donations, loans and casualty losses.

If the base is gross sales price, is that the amount the seller receives, the amount the buyer pays, or another amount? If the base is net profit, allowable expenses of holding and selling the art must be determined.

Such laws benefit the artist; some also benefit surviving spouses or heirs. The benefit might be limited to citizens or residents of the country, or of a country providing reciprocity. The right could last for a short time after the first sale, for the duration of the copyright, or forever.

Whether the right should be waivable or transferable has been hotly contested.

When laws of multiple countries apply, choice of law is needed.

The tax consequences of transferring the underlying right and the payment or receipt of the royalty are important.

Enforcement provisions are discussed, such as withholding, information reporting, remedies, and the roles of collecting societies, statutes of limitations, and government agencies.

Comparisons are made to Australian, English, French and California law.

Keywords: art, royalty, copyright, joint venture, title passage, sale defined, sales price, net profit, royalty cap, transfer tax, income tax, withholding,collecting societies, information return, statute of limitations, trust

JEL Classification: K10

Suggested Citation

Lazerow, Herbert I., Art Resale Royalty Options (October 16, 2015). San Diego Legal Studies Paper No. 15-198, Available at SSRN: https://ssrn.com/abstract=2675393

Herbert I. Lazerow (Contact Author)

University of San Diego School of Law ( email )

5998 Alcala Park
San Diego, CA 92110-2492
United States

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